UK equities opened higher on growing expectations that the Bank of England will cut interest rates next week, after data showed a sharp contraction in the economy.
The FTSE 100 rose 0.4% to 9,737.36 in early trading, while the mid-cap FTSE 250 added 0.2% to reach 21,894.98.
Suren Thiru, economics director at the ICAEW, said the figures confirmed a weak October for the UK economy, with pre-Budget uncertainty stalling activity across major sectors, despite a lift to manufacturing from Jaguar Land Rover’s return to production.
He warned that November may have been equally unsettled, as intense speculation ahead of the Budget likely undermined business and consumer confidence, freezing broader economic activity. Thiru added that the fallout from the Budget could weigh on near-term prospects, with a rising tax burden and a softer labour market keeping growth below official forecasts.
According to Thiru, the disappointing data are likely to heighten concerns among policymakers about the economy’s health, strengthening the case for a December rate cut, particularly given the Budget’s potentially deflationary effects.
